His opinion about many of the problems regarding weak GDP growth and why we may hit a double dip recession is due to consumers and local governments deleveraging. I agree 100%. We have multiple issues coming together that are giving us fits. Aside from the mortgage crisis and the real estate bubble, we are now cleaning up the consumer debt mess (credit cards, personal loans and car loans). The biggest reason why demand is not there is because consumers and local governments are using the majority of their funds to pay off debt. To add to this mess, food and energy prices show inflationary pressures due to the new oil demands from developing countries and the drought issues affecting the midwest and other parts of the world affecting crop yields.

If the Federal gov't wasn't in such a mess with its debt load, this would have been a perfect opportunity to use Keynesian economics to stimulate the economy. While we and the local/state governments are putting our financial houses in order, the Feds could have been providing the support to the economy and embarking on real investment in projects like new roads and bridges plus refurbishing airports and ports. Money for railroads would be too provided it would be spent smartly on improving routes in high population centers only. No high speed rail between no man's land. Again, this is how Keynesian economics should have worked. However, since the Fed gov't was so irresponsible with our budgets this is the real blown opportunity.

Now the best course of action is to do nothing, and let the gov'ts and consumers work through the debt issues. Whether we double dip or technically stay out of a second recession, our recovery will be painfully slow because everyone will not be able to control their debt at the same time or rates.